Keeping records makes good business sense!
How long should you keep them? This really depends on the type of entity you are – whether you are a sole trader or a limited company.
The general rule of thumb for a sole trader is that you need to keep accounting records for a minimum of 7 years. However, if HMRC find anything untoward within an investigation they have the power to request records up to 10 years old.
For limited companies, the directives are more specific as they are set out in the Companies Act 2006 as follows: –
| Purchase invoices | 6 years |
| Sales invoices | 6 years |
| Petty cash records | 6 years |
| Tax records for an employee leaving the company | 6 years plus current year |
| Tax code changes | 6 years plus current year |
| Payroll | 6 years plus current year |
| Records relating to working time | 2 years from the date on which they were made |
| Application forms and interview notes | 6 months – 1 year |
| Statutory maternity and sick pay records | 3 years after the end of the tax tear in which the absence ends |
| National Minimum Wage records | 3 years after the end of the pay reference period following the year which the records cover |
| Insurance documents | 3 years after lapse |
| Minutes of directors and shareholders meetings and resolutions passed | Minimum 10 years following the date of the meeting /resolution / decision |
| Directors’ service contracts | Minimum of 1 year after the termination of the contract |
| Fixed asset register | Permanently |
| Annual accounts | Permanently (as per the Data Protection Act) |
| Contracts with customers, suppliers or agents | 6 years after expiry or termination of the contract (if the contract is executed as a deed the limitation is 12 years) |
Do I have to keep physical paper records? Paperless systems are becoming increasingly popular. However, the paperless system must be capable of producing hard copies of the documentation for the times specified above.
We thoroughly recommend keeping orderly records. Not only is it time saving for you and your accountant, it makes life an awful lot easier should the taxman come calling.
Accountants247 will keep copies of our working papers, your accounts and tax returns for a minimum of 7 years before we arrange for their secure destruction. If you have any questions about what kind of data we keep and for how long or about how to keep your own records, give us a call on 02393810734.
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